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Purchasing your first home is an exciting moment, but before you can buy, you need to save for the down payment. For most individuals, this process isn't as easy as they imagine. There are multiple steps involved in achieving this goal, including determining the size and type of mortgage that you plan on getting. To ensure that this aspect of your first home purchase is successful, follow the steps detailed below.

How to Save for Your First Mortgage

Before you can determine how much to save, you need to know how much you'll have to pay. First, look at the local home market and determine your price point. Next, decide which style of mortgage is right for you. While a conventional home loan usually requires 10 to 30 percent of the overall home price in a down payment, an FHA loan only requires 3.5 percent. By knowing these two points, you'll be able to estimate how much cash you'll need.

MortgageOnce you have a number in place, it's time set a goal and a plan. This step is reliant on how soon you want to buy a home; divide your goal total by the number of months or paydays between now and then. The resulting number is how much you need to transfer to your savings account each time you get paid. 

Now that you've created a plan, look for ways to make it happen. For most buyers, it's as simple as cutting back on their monthly expenses. Consider giving up non-necessary costs, like cable, streaming services, and leisure items. You should also reduce the amount that you eat out at restaurants or order delivery. These costs add up quickly, and by avoiding them temporarily, you can reach your down payment goal faster.

You should also consider opening a new savings account that is for your down payment, but shop around to find the highest interest rates. This separation can help you avoid the temptation of dipping into your funds, and it will also help your money grow more quickly.
 

Saving for a down payment is one of the first steps in buying your first home, but one of the most important is choosing the right mortgage. Aloha Mortgage in Honolulu, HI, prioritizes the needs of their clients by helping them evaluate multiple home loan options to ensure they find the lowest interest rate available. As a local mortgage broker, the team has insight into the unique needs of Oahu home buyers. Schedule a consultation today to learn more about your options by calling (808) 255-9366.

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